Academic journal article Multinational Business Review

The Strategy of an Ancient Warrior: An Inspiration for International Managers

Academic journal article Multinational Business Review

The Strategy of an Ancient Warrior: An Inspiration for International Managers

Article excerpt

While previous research involving Sun Tzu's Art of War focused on its application to business in general, this article applies it to international business, using China as the model. The interaction between China's industrial entities, mostly state-owned, and foreign managers seeking to make a profit there are compared to the dynamics of warfare between countries, Sun Tzu's original frame of reference. Thus envisioned, Sun Tzu's prescriptions for military success, including the avoidance of war if reasonably possible, are discussed in the light of his "Five Constant Factors" (a formula for knowing oneself) and his "Seven Comparisons," (a formula for knowing one's adversary), and adapted to China's complex, risky, international business environment.

INTRODUCTION

Sun Tzu's Art of War has been regarded through the centuries as the bible of military strategy although it was written five hundred years before Christ. Originally a way of defeating an opposing army, the Art of War is now seen as a strategy for prevailing over one's business competitors (Ames, 1993; Benjamin, 1993; Chen, 1994; Cloud, 1990; Floyd, 1992; Lee et al., 1994; Lucas, 1994; Ohmae, 1988; Tung, 1994; Romm, 1991; Wee et al., 1991).

This article differs from other articles on the Art of War because it focuses on competing in international markets and because it includes business counterparts and stakeholders, not just competing companies as such. Because the protection of the company's home government is greatly reduced, international markets are as complex and competitive as the battlefield, and the players rarely share the same "game" rules. In addition, the inclusion of business counterparts and stakeholders, e.g., suppliers and creditors, makes the study more realistic because such parties, even though not in the forefront, can cause the company to fail. We have chosen U.S. companies doing business in China as a model because their operations there are more visible and because China is experimenting with its own version of a capitalistic market. The rules of the game in China are not yet clearly defined and, in most cases, there is no industry standard.

Further, stakeholders in China, such as the central and local governments, suppliers, and distributors behave quite differently than their U.S. counterparts, and the foreign company finds itself facing a continuous chain of new experiences. As a result, developing effective strategies in China is like preparing for a military campaign where the enemy enjoys the advantage of its own turf and can manipulate its resources in powerful but elusive ways.

SETTING THE STAGE

Is war necessary to achieve political goals? Is fierce, unrelenting competition necessary to succeed in business? Sun Tzu considered the waging of war a critical question because losing it might mean losing one's country and making slaves of one's countrymen. But a similar fate might befall a company engaged in international operations when it is overcome by competition.

There would probably be the loss of resources, serious damage to the home country's overall competitiveness, and ultimate bankruptcy. One can say, therefore, that competition is to a firm as war is to a country and that business strategy is to a firm as military strategy is to a country. Like war, business requires the commitment of substantial resources and personnel, and thorough deliberation is necessary because a profit may not materialize for some time. Doing business overseas is particularly difficult because of the unknowns involved. Many companies should not even contemplate it because they are not equipped for such a risky adventure.

For these reasons, Sun Tzu took the position that the real "art" of war is to win without fighting, if possible. Similarly, the real art of doing business is to succeed without engaging in destructive, cutthroat competition. One way to achieve that objective is to engage one's competitors in activities in which they also stand to benefit. …

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